When Asset Division in a New York Divorce Includes a QDRO
Evaluation and negotiation of financial aspects is a reality that every person and every couple approaching divorce must take into account. Division of retirement accounts is often achieved by way of a QDRO (qualified domestic relations order). A QDRO enables division of pensions and other types of retirement funds without the usual tax consequences of breaking into such accounts. But not all retirement plans can be divided by court order so knowledge and care is necessary to cover all these variations.
QDRO for Division of Pension Plans
Some types of retirement accounts, such as 401(k) and 403(b) plans, do not need to be included in a QDRO. The QDRO deals with pension plans. A QDRO should take into account such details as anticipated cost-of-living increases, pre-retirement death benefits and survivor annuities, early retirement incentives.
QDROs Require Skill and Up-to-Date Knowledge of Divorce Law
QDROs are an example of a technical aspect of divorce that is best handled by a family law attorney with ample experience handling high-net-worth divorces. The degree of detail that must be included in a QDRO is akin to the type of work that an accountant does. In negotiation of equitable distribution of assets such as retirement accounts, we remind our divorce clients of the importance of setting aside emotional aspects of a divorce and treating it more like a business transaction.
Asset Division in Divorce Has Lifelong Financial Consequences
The outcome of equitable distribution of assets, including retirement funds divided by a QDRO, will have great consequences for both spouses. It is important to keep tax consequences clearly in mind and to address critical questions such as the following:
- Can the pension benefit continue for the other (soon to be ex-) spouse after death of the plan owner?
- What will happen in the event of an early retirement? Will potential termination settlements down the road be theoretically included as part of the marital pot?
- Does the particular industry involved (such as railroad) have special rules about retirement funds that need to be taken into account?
These are examples of details that need to be carefully considered in connection with crafting of a QDRO. An experienced lawyer who regularly handles high-net-worth divorces is a valuable ally when it comes to property division.
Contact a well-respected New York family law attorney at the Nyack offices of McCormack & Phillips, Attorneys at Law, in Rockland County. Other lawyers often refer potential clients to our law firm, confident in our ability to handle challenging issues.